Strangely Modi and Manmohan growth models are similar

Gujarat chief minister Narendra Modi and Prime Minister Manmohan Singh are political opponents but their growth models are strikingly similar.

Both of them believe that extending largesse to the industry would result in automatic socio-economic benefits to a large section of population.

In theory, the proposition seems sound. In practical, it does not happen.

The reason is simple —- the industry hawks believe in filling their coffers and not sharing more than what is required to run the business with a large section of population.

Their approach does not change even at the time of slowdown. The corporate world looks at ways to retain their profit margin even if it hurts a large section of society through high inflation despite liquidity crunch in the market. What else can be the reason for 5 million Indians losing their jobs between 2004-05 and 2009-10.

Manmohan Singh led UPA government had been quick to criticise Gujarat government’s economic growth model, which Modi had tried to sell hard in the last month or so since his prospect of being BJP’s prime ministerial candidate has blossomed. Frankly speaking I don’t think that BJP will make Modi PM if it comes to power in 2014.

The UPA government had said Modi’s growth model has benefited select industries and not the deprived and the poor in Gujarat. Factually, it is correct. The gain of Gujarat’s economic growth model has not been inclusive as large sections of the society have been left out.

Manmohan-Montek’s number centric growth model faces similar malaise. The National Sample Survey (NSS) data shows that inequality between the richest 10% and the poorest 10% population in India widened between 2004-05 and 2009-10.

A closer look at the NSS data shows that the trickling down effect of the 8-9% economic growth has been inadequate. Reason the government did not create capacity at the lower strata of the society to gain economically and socially from growth. What they got was just leaked drops from a full tank.

No one better than noted Bangladeshi economist and nationalist Rehman Soban summed up the failure of Manmohan Montek model, which he termed market oriented. “They believe that the poor are with us and having some social provisioning for them will help in retaining them,” he said at a function in Delhi at presence of Ahluwalia, who did not retort his claim.

Instead, Ahluwalia for the first time admitted that lower economic growth could mean more socio-economic models for all. He may have in mind the Bangladesh growth model where average growth rate of 5-6% caused bridging of inequality and poverty alleviation.

Within India, another BJP ruled state Madhya Pradesh presents a better inclusive growth model than Gujarat. The state ruled by not so media savvy, Shivraj Chauhan, had witnessed higher dip in maternal mortality and infant mortality rates that the national average. The rate of poverty reduction (in 2009-10) in Madhya Pradesh was more than the industry’s darling Gujarat. Just good implementation of public distribution system and creation of health network did the trick. That has not happened in Modi’s Gujarat, where emphasis had been on development of infrastructure for industry.

What triggered my writing on this aspect was an oblique reference of the Prime Minister’s Office reference that Gujarat development model was not the best for Bihar to adopt. Modi had suggested in Kolkata earlier this week that Bihar should take leaf from Gujarat’s development. I wondered at the PMO’s negation as both Modi and Manmohan models are based on similar principles.